Asia needs further steps amid euro zone crisis: Japan PM

Sat Nov 19, 2011 9:26am EST
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By Yoko Nishikawa

NUSA DUA, Indonesia (Reuters) - Japanese Prime Minister Yoshihiko Noda said on Saturday Asia needs to consider further steps to avoid a financial crisis as the euro zone's debt problems could spill into the region.

While Asia has become more resilient due to its economic management since the region's own financial crisis in 1997/98, it is not immune to Europe's problems, Noda said.

"I don't think Asia is necessarily vulnerable to external shocks (from Europe)," Noda told a news conference after the East Asia Summit on the Indonesian resort island of Bali.

"Given efforts to conduct sound economic policy, the region generally enjoys a current account surplus and its foreign reserves are at high levels, so it has become more resilient to external shocks."

"Having said that, there is no doubt that we could face adverse impact if we cannot build a firewall against the European crisis."

Policymakers around the world are worried that Europe's inability to unify around a debt strategy could hurt their economies.

Greece, Ireland and Portugal - all small, peripheral euro zone economies - have already been forced to accept EU/IMF bailouts as they can no longer afford to borrow commercially.

Now Italy's borrowing costs have reached unsustainable levels, while Spain's are nearing this point and the crisis is even starting to affect triple-A rated France.   Continued...